Is there a relationship between "Full pension" (as % of LTA) and Transfer Value of a DB Pension?

On-the-coast

Poor deal - unless the OP is in bad health

DE_612183

QrizB said:

Dazed_and_C0nfused said:

151Taddy said:

atuff

How old are you?

From previous posts, OP was gainfully employed in 1974 so I'd guess they're in their mid-60s or older:

https://forums.moneysavingexpert.com/discussion/comment/81254775/#Comment_81254775

Probably older - back in the 70's you normally joined the pension scheme at 18 - so 18 in 74 is at least 70 now...

Marcon

OP - as you can see, there is considerable bafflement over this. In the absence of all relevant information it's impossible to know the basis on which your IFA is recommending a transfer - and the fact you feel the need to come and post here, having doubtless paid handsomely(!) for the advice, suggests you aren't exactly convinced.

Are you able to give details of why an IFA thinks you would be best served by moving your transfer value of £83,000 to some sort of personal pension, thereby giving up a tax free lump sum of £22K and an annual pension of £7,300 (with a contingent spouse's pension of 50%)? The suitability report you've received from them will cover this in detail - or should...

Silvertabby

DE_612183 said:

QrizB said:

Dazed_and_C0nfused said:

151Taddy said:

atuff

How old are you?

From previous posts, OP was gainfully employed in 1974 so I'd guess they're in their mid-60s or older:

https://forums.moneysavingexpert.com/discussion/comment/81254775/#Comment_81254775

Probably older - back in the 70's you normally joined the pension scheme at 18 - so 18 in 74 is at least 70 now...

But DB schemes generally have a transfer out limit of not less than 12 months before NRA. 

Albermarle

Silvertabby said:

If those figures are correct, I can't believe that you have found an IFA willing to approve the transfer.  

Also my first thought, the transfer value ( assuming it is accurate) is abysmal.
 I would have expected something like double that at least .

151Taddy

I'm in my In my early 70's already have a DB pension and a SIPP in drawdown.
This is a "forgotten" Pension accrued in the 1970's and recently discovered.

151Taddy

Silvertabby said:

DRS1 said:

Silvertabby said:

DRS1 said:

But presumably if an IFA has approved the transfer it can't be that bad a deal?  Aren't we told that such approval is rather rare these days.

BTW if the LTA has been abolished why is the OP getting a "value" for the pension and then a percentage of the LTA that the value represents?

Based on the figures supplied by OP, that would be an horrendous deal!  

 The total tax free cash that can be taken (from all pensions) is still 25% of what was the LTA, so probably just the way the letter was worded.  

I wondered about that but £22k is nowhere near 16.4% of the LSA.

It's the total value.  Suspect it's due to an auto generated letter that hasn't been properly updated.

The 80k figure is the 16.4%

Silvertabby

151Taddy said:

I'm in my In my early 70's already have a DB pension and a SIPP in drawdown.
This is a "forgotten" Pension accrued in the 1970's and recently discovered.

Then you may wish to double check that a transfer out is even an option for you.  Happy to be corrected, but I'm not aware of any DB schemes that have statutory rights to transfer after NRA (normal retirement age).  Yes, I know you've been given a figure, but that may have been generated by a junior administrator who didn't notice your date of birth.  I've seen that happen.

Also well worth checking when your pension would be paid from.  This IS where scheme rules differ - some may pay a late payment enhanced pension from the date you claim it, while others will backdate payment to your NRA.

Silvertabby

151Taddy said:

Silvertabby said:

DRS1 said:

Silvertabby said:

DRS1 said:

But presumably if an IFA has approved the transfer it can't be that bad a deal?  Aren't we told that such approval is rather rare these days.

BTW if the LTA has been abolished why is the OP getting a "value" for the pension and then a percentage of the LTA that the value represents?

Based on the figures supplied by OP, that would be an horrendous deal!  

 The total tax free cash that can be taken (from all pensions) is still 25% of what was the LTA, so probably just the way the letter was worded.  

I wondered about that but £22k is nowhere near 16.4% of the LSA.

It's the total value.  Suspect it's due to an auto generated letter that hasn't been properly updated.

The 80k figure is the 16.4%

No...

£83,000 / £1,073,100 X 100 = 7.73%

£175,000 / £1,073,100 X 100 = 16.31%

Difference is due to using round £s, whereas the actual calculation will include the pennies.

Silvertabby

151Taddy said:

I'm in my In my early 70's already have a DB pension and a SIPP in drawdown.
This is a "forgotten" Pension accrued in the 1970's and recently discovered.

Another point to check when doing your financial planning - were you already married to your current (sorry, have to be clear!) wife when you left this scheme?  If not, then there may not be a spouse's pension due on your death.

Post retirement marriage rules are pretty universal, and mean that if you married AFTER you left this scheme, then only your post April 1978 service (if any) would count towards widow's benefits.  Again, this is something that a junior administrator could easily miss, as it's rarely an issue now.